WASHINGTON — Conservatives anxious to counter America’s leading economic adversary have set their sights on a top trade priority for labor unions and progressives: cracking down on the deluge of duty-free packages coming in from China.
The changing political dynamic could have major ramifications for e-commerce businesses and consumers importing products from China valued at less than $800. It also could add to the growing tensions between the countries.
Under current U.S. law, most imports valued at less than $800 enter duty-free into the United States as long as they are packaged and addressed to individual buyers. It’s referred to as the de minimis rule. Efforts to lower the threshold amount or exclude certain countries altogether from duty-free treatment are set to become a major trade fight in this Congress.
“De minimis has become a proxy for all sorts of anxieties as it relates to China and other trade-related challenges,” said John Drake, a vice president at the U.S. Chamber of Commerce, who argues that the current U.S. law should be preserved.
The rule speeds the pace of commerce and lowers costs for consumers. It also allows U.S. Customs and Border Protection to focus its resources on the bigger-ticket items that generate more tariff revenue for the federal government.
The volume of products coming into the U.S. that benefit from the de minimis rule has soared in recent years. Congress raised the U.S. government’s threshold for expedited, duty-free treatment from $200 to $800 in 2016.
The volume of such imports has since risen from about 220 million packages that year to 771 million in 2021 — with China accounting for about 60%, according to the government — and 685 million last year.
“I think everybody’s got to kind of wrap their head around what kind of mistake this was,” Robert Lighthizer, the former U.S. trade representative during the Trump administration, told a House panel last month. “Nobody dreamt this would ever happen. Now we have packages coming in, 2 million packages a day, almost all from China. We have no idea what’s in them. We don’t really know what the value is.”
Lighthizer urged Congress to get rid of the de minimis rule altogether, or take it to a much lower amount, say $50 or $100.
He said foreign companies are taking advantage of the “loophole” and “putting people out of work in stores, they’re putting people out of work in manufacturing.”
Last year, House Democrats pushed to prohibit Chinese-made goods from benefiting from the special treatment for lower-cost goods. That move was part of a larger measure that boosted investments in semiconductor manufacturing and research.